IMF cuts global growth forecast for 2022 and ’23

WASHINGTON – The International Monetary Fund on Tuesday downgraded the outlook for the world economy this year and next, blaming Russia’s war in Ukraine for disrupting global commerce, pushing up oil prices, threatening food supplies and increasing uncertainty already heightened by the coronavirus and its variants.

The 190-country lender cut its forecast for global growth to 3.6% this year, a steep falloff from 6.1% last year and from the 4.4% growth it had expected for 2022 back in January. It also said it expects the world economy to grow 3.6% again next year, slightly slower than the 3.8% it forecast in January.

The war came just as the global economy appeared to be shaking off the impact of the omicron variant.

“The war will slow economic growth and increase inflation,” IMF chief economist Pierre-Olivier Gourinchas said

Tuesday.

Now, the IMF expects Russia’s economy – battered by sanctions – to shrink 8.5% this year and Ukraine’s 35%.

U.S. economic growth is expected to drop to 3.7% this year from 5.7% in 2021. The new forecast marks a downgrade from the 4% predicted at the beginning of the year. Hobbling U.S. growth this year will be Federal Reserve interest rate increases, meant to combat resurgent inflation, and an economic slowdown in key American trading partners.

Europe, heavily dependent on Russian energy, will bear the brunt of the economic fallout from the war. For the 19 EU countries, the IMF forecasts collective growth of 2.8% in 2022, down sharply from the 3.9% it expected in January and from 5.3% last year.

The IMF expects the growth of the Chinese economy, the world’s secondbiggest, to decelerate to 4.4% this year from 8.1% in 2021. Beijing’s zero-COVID strategy led to lockdowns in commercial cities like Shanghai and Shenzhen.